Counting carbon in transportation

“The [transportation] sector as a whole needs to transform and realize the opportunity to make a profound impact on the environment and the business benefits to reducing emissions. Those companies which are already investing in that transformation will be better positioned for a carbon constrained world.” –Zoe Tcholak-Antitch, vp and head of investors for the Carbon Disclosure Project (CDP)

Counting carbon emissions is becoming a very big deal in the global business community these days.

Now, whether you agree with the hazards posed by carbon emissions (largely carbon dioxide, good old CO2, which by the way plants and trees need in order to live ... let's not forget that!) in terms of climate change/global warming is almost beside the point. Not only are governments around the planet aiming to regulate carbon emissions, businesses are in many cases jump-starting their own carbon reduction efforts, and not just to stay a step ahead of potential mandates.

That’s because companies like Wal-Mart and others believe big cost savings are one of the major “byproducts” from reducing carbon emissions – especially in terms of transportation dollars. For in trucking, “carbon reduction” translates into “greater fuel efficiency” and Wal Mart for one believes it can slice upwards $300 million out of its transportation budget by driving greater fuel savings across its global supply chain operation.

[Here’s how, from Wal-Mart’s perspective, carbon reduction efforts tie into an overall “corporate sustainability” strategy, along with fuel savings mentioned above. A couple of notes: the video cuts off at the end unfortunately but you’ll also get a hoot out of a humorous plan to offer “concentrated” Bud Light …]

One reason transportation is becoming a great focus of carbon reduction efforts because such efforts could have a major long-term impact on climate change and world energy usage. That, at least, is the conclusion reached by a new global study conducted by the Carbon Disclosure Project (CDP).

CDP, by the way, touts itself as an independent, not-for-profit organization that serves as a scorekeeper and data-house for carbon emission and climate change information disclosed by businesses around the globe.

According to its data, transport firms lag behind what it calls the "Global 500 Companies" in mitigating greenhouse gasses and setting targets. Currently, only 36% of transportation companies have set carbon and energy reduction targets, compared to 51% of the "Global 500 Index" of companies across all sectors, it said.

CDP surveyed 291 of the largest transport companies, including road, rail, sea and air transport, and found: only 9% of transport firms report information on current investments in emissions reduction and alternate low-carbon options and only 4% on future investments, with road transportation accounts for 80% of the sectors total CO2 contribution, followed by air (13%) and sea transportation (7%).

[Here’s a very slick overview of what the CDP is all about. You’ll note a bevy of high-profile folks touting the group’s endeavor, with former President Bill Clinton the most notable, but it’s interesting to note the commentary from folks such as news baron Rupert Murdoch and companies such as Wal-Mart.]

The reason why transportation – and in particular, the freight hauling sector – always seems to be in the crosshairs of such carbon complaints is that the global transport industry now accounts for 13% of global emissions and is one of the fastest energy-demand sectors, responsible for 60% of oil consumption in high-income countries, according to CDP’s numbers.

Thankfully, though, the group recognizes the importance of transportation within the U.S. economy. In 2008, CDP said in its report, transportation-related goods and services contributed $1.38 trillion to U.S. gross domestic product (GDP) – a dollar figure that represents 9.5% of total U.S. GDP.

Despite this, only half of the transportation companies surveyed report having a clear understanding of the risks and opportunities associated with regulations, said GDP, while almost 70% of Global 500 companies, that are turning risks into opportunities for growth, innovation and competitive advantage.

[While this clip rehashes a lot of CDP’s background laid out in the first video, it provides more context in terms of listing the number of companies reporting to CDP and the total amount of revenues those firms represent.]

Although reporting on investments for reducing emissions and greener technologies is still in its infancy, $31.93 billion has already been committed or invested into low carbon initiatives and innovations in the transportation sector worldwide, CDP noted, pointing to the efforts by firms such as Canadian National Railways and United Parcel Service(UPS) as examples.

In UPS’s case, the expedited carrier plans to improve the miles per gallon (mpg) performance of its entire U.S. package delivery fleet by 20% between 2000 and 2020 – building on a 10% mpg gain achieved between 2000 and 2009 for its U.S. ground fleet of 60,000 vehicles, according to said Bob Stoffel, UPS’s senior vp and of its sustainability program.

“Our automotive efficiencies over the last decade show a genuine commitment to conserving fuel and decreasing the emissions associated with the packages we deliver,” Stoffel noted. “This new goal for the next decade is an important milestone in UPS's continuing dedication to finding and using new technology and processes that help us meet our customers' needs in a sustainable way.”

For example in 2009, UPS drivers logged 77.3 million more miles than in 2000, yet fuel consumption decreased by 3.2 million gallons, he said. Fuel efficiency levels were increased through improved vehicle technology, greater use of alternative fueled vehicles such as hybrid trucks, effective vehicle maintenance procedures, fuel conservation efforts, sophisticated routing technology and operational initiatives such as minimizing engine idling.

“Through the use of routing technology alone, we avoided driving more than 20.4 million miles, with an associated emissions avoidance of 20,000 metric tonnes in 2009,” Stoffel added.

UPS also plans to improve the carbon efficiency (CO2/ATM) of its airline by an additional 20% by 2020, for a cumulative reduction of 42% since 1990, as its airline operations represent 53% of the company's global carbon footprint.

So don’t be surprised to see most such “carbon reduction” efforts pop up among the freight hauling community in the months and years ahead.

For, despite the well-deserved grumbling about government mandates adding costs to the transportation sector’s bottom line through such emission control efforts, carriers are also seeing ways to save big bucks as well – and nothing drives change quite so hard or so fast as an opportunity to take cost out of the bottom line.